TaxTMI 
TaxTMI 
2024 (11) TMI 419
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....facts and circumstances of the case the Assessing Office erred in denying the exemption u/s. 54 of the income tax Act,1961 on the ground that the investment in residential house in not in the name of the Assessee, but in the name of Spouse / relatives of the Assessee. III) On Facts and Circumstances of the case the learned C1T (Appeals), National Faceless Appeal Centre erred in confirming the addition of Rs. 51,10,050/- on account of long term capita! gain on Sale of residential immovable property assessed by the Assessing Officer u/s. 143(3) /147 of the Income tax Act, 1961. IV) Without prejudice to the above, on facts and circumstances of the case & on merits and judicial pronouncements the Assessee is entitled to full exemption of Long term capital gain u/s. 54 of the Income-tax Act, 1961 and accordingly there is no taxable Long term capital .gain assessable in Assessment Year 2011-12." 3. The assessee has taken the following additional ground also: - "1. The Ld. CIT(A) failed to appreciate that the residential property sold on 26/10/2010 was in joint name of deceased assessee and his wife Mrs. Gulbanu Shaikh, therefore capital gain ought to have been assessed in hands of....
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....fter interest, the demand stands amounting to Rs. 27,48,810/-. Being aggrieved, the assessee filed appeal before the CIT(A). Ld.CIT(A) fully relied on the judicial precedents and upheld the assessment order. Being aggrieved, the assessee filed appeal before us. 4. The assesseeis deceased person. The appeal is filed through the legal heir of the assessee, Mr. Abdul Samad Shaikh. During the proceedings, the Ld.AR of assessee has filed the addition ground which is taken into consideration for the adjudication. 5. The Ld.AR for assessee has filed a written submission which is kept in the record. The Ld.AR first argued that the property is in joint name with assessee and his wife, copy of purchase deed APB pages 11-18 and the capital gain ought to have been assessed in hands of deceased assessee and his wife. The legal issue was taken in additional ground by the Ld.AR. 6. The Ld.DR argued vehemently and opposed the additional ground of the assessee as the ground is taken by the ld. AR first time before the bench. 7. The Ld.AR in argument placed computation in relation to the joint ownership of the property and the exemption claimed under section 54F. The computation is annexed herew....
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.... was duly invested in the new property. The assessee and his wife both are the joint owners of the original property. So, both were also the owners of the new properties, i.e. flat No.508A and 509. In any case, the addition should be made in proper hands. In this connection, the Ld.AR relied on the order of the Hon'ble Apex Court in the case ofIncome-tax Officer vs CH Atchaiah 218 ITR 239 (SC). The relevant observation of the Hon'ble Apex Court is as below:- "This question has also been troubling the High Courts in the country. As a mailer of fact, the Patna and Andhra Pradesh High Courts have taken different views. Be that as it may, we may mention that the Patna High Court in Mahendra Kumar Agrawallav. 1TO [1976] 103 ITR 688, the Punjab and Haryana High Court in Rodamal Lalchand v. CIT [1977] 109 ITR 7, the Andhra Pradesh High Court in Choudry's case [1986] 158 ITR 224 and the Delhi High Court in Punjab Cloth Stores v, CIT [1980] 121 ITR 604 have taken the view which we have taken. On the other hand, the Madras High Court in CIT v. Blue Mouniain Engineering Corporation [1978] 112 ITR 839 and the Patna High Court in its earlier decision in CIT v. Pure Nichitpur Colliery Co. ....
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....outset that the tax now impugned has been imposed by the local authority from March 12, 1935, and that the first occasion when its validity was attacked was in only 1957, though if the petitioners are right in their submissions their acquiescence might not" 9. The Ld.AR vehemently argued and also invited our attention in the written submission which is placed, in APB pages 110-118& filed before Ld.CIT(A) on dated 11-09-2023 during the appeal hearing. The relevant part of the submission is reproduced as below:- "3.5.Mukkamala Srihari Rao Vs Assistant Commissioner of Income-tax (ITAT Ranchi) Appeal Number: ITA No. 196/Ran/19 Date of Judgement/Order : 01/08/2022 Related Assessment Year : 2015-16 - In the instant case the assessee has applied the sale consideration received from sale of capital asset towards purchase of residential flat in the name of his wife and son, the assessee is eligible to claim deduction u/s. 54F of the Act subject to fulfillment of all other conditions provided u/s. 54F of the Act. We, thus, reverse the \ finding of the Id. CIT(A) and allow ground raised by the assessee and direct the ld. AO to allow the benefit of deduction u/s. 54F of the Act at Rs. 89,45....
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....as per the scheme of Section 54 and 54F of the IT Act as mentioned above. 17. In view of the above mentioned specific and categorical judgment of the jurisdictional High Court, claim of the exemption under section 54 is restricted to one property purchased in the name of the Assessee. Assessee's contention and further claim made in the written submission is not accepted as the Assessee failed divert capital gain received for the purpose of purchase of new property, in his own name, as envisaged in the scheme provided in section 54 of the I.T. Act. In view of the above detailed reasoning, claim of relief in terms of section 54 is restricted to the property .purchased in the name of the Assessee." 11. The Ld.DR further invited our attention on paras 6.18 to 7 of the appeal order, which are as under: - "6.1.8 From the readings of the judgments cited it is thus clear that in order to claim exemption u/s 54 the property should have been purchased in the name of the appellant. Therefore respectfully following the judgment of the Hon'ble Bombay High Court in the case of Prakash vs. ITO (ITA no. 15 of 2002) which is also strengthened by the judgment of the Hon'ble Punjab a....
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....ike all other laws, have to be interpreted reasonably and in consonance with justice". Again at page 577, it was held that "for determining the person liable to pay tax, the test laid down by the Court was to find out the person entitled to that income". Again at page 578 it was observed : "No one denies that an evacuee from Pakistan has a residual right in the property that he left in Pakistan. But the real question is, can that right be considered as ownership within the meaning of Section 9 of the Act. As mentioned earlier that Section seeks to bring to tax income of the property in the hands of the owner. Hence, the focus of that Section is on the receipt of the income. The meaning that we give to the word "owner" in Section 9 must not be such as to make that provision capable of being made an instrument of oppression. It must be in consonance with the principles underlying the Act." In our opinion, the above observations of this Court clearly fixes the liability on a person who receives - or is entitled to receive the income from the property in his own right. In spite of this, the assessing officers of various circles instead of uniformally following the ratio laid down in ....